Okay, Tucson isn't one of these. Housing prices are up in 70 major markets in China, but it could have financial implications for the United States, our mortgage funding availabilty, and our interest rates!
While we're trying to figure out how to get things going again in the US, China is trying to slow things down. Bloomberg reported today that "House prices in 70 major cities [in China] jumped 10.5 percent in November from a year earlier."
Elaine Kurtenbach, an AP writer and blogger, talked about this two weeks ago, but I haven't seen additional reporting until today.
"Of all Asia's markets, China's is the hottest - although the boom is creating problems there, too. Housing inflation is pricing some people out of the market, and authorities worried about excessive development are raising interest rates and taking other steps to curb lending.
Many Chinese families are already deep into speculating on property, a main driver of the surging prices that have Chinese authorities worried a bubble may be forming. New apartments north of Shanghai's famous Bund waterfront are selling for a record $17,000 per square meter.
Yi Xianrong, a prominent economist at the China Academy of Social Sciences, a government think tank, is one of those sounding the alarm. He contends that China's housing loans are riskier than those in the U.S. because most loan applicants give false information about their assets and income."
Does any of this sound familiar? China has no equivalent to our three credit bureaus in the US. Lacking a comprehensive credit vetting system, the quality of loans may be even lower than those in the US which have caused the subprime crisis.
China raised its benchmark rate today, and it's sitting just under 7.5% This kind of return will cause an inflow of speculative capital from other countries around the world. When China's housing bubble pops, the fallout in terms of capital liquidity will make our subprime mess seem trivial by comparison. There will be local implications for you as a lender and the real estate community whose livlihood depends on mortgage availability.
And that's the real estate opinion of this Tucson, Arizona mortgage lender,
Mike in Tucson
